Obtuse wording has unintended consequences for some families

JeanettePavini

Award-winning broadcast journalist and author Jeanette Pavini writes the Buyer Beware column for MarketWatch and wants to hear your stories, questions, problems and complaints. Write to her at BuyerBewareMKTW@gmail.com.

SAN FRANCISCO (MarketWatch) — Vince Smith was a Marine who was proud of taking care of his country, his wife and his two children. That changed after 21 years of serving his country, when he was diagnosed with a service-related disability. Suddenly, his wife, who was just 48, started taking care of Vince.

“It is extremely difficult for a Marine to lose their physical abilities and then to slowly lose their life,” says Edie Smith, who is now 71. She was her husband’s caregiver for 12 years before he died at age 60 in 1998.

Edie Smith has gone from caregiver to “Capitol crusader,” as her son-in-law puts it. She’s a member of the Gold Star Wives, a group of widows who have not only lost their spouses but also their annuity payouts from their Survivor Benefits Plan (SBP).

Here’s why: In addition to Veterans Administration benefits, military widows and widowers can receive a monthly annuity through the Department of Defense. It’s called the Survivors Benefit Plan, but — because of a federal law that some call the “widow’s tax” — they get it only if they remarry after the age of 56. This is despite the fact that military couples have voluntarily paid significant premiums for their SBP policies, which are annuities that are triggered when a military spouse dies. Read more: Military widows forced to remarry to get benefits.

Most widows have no idea there will be an offset because so many of their spouses die suddenly. In Edie Smith’s case, since her husband was on disability for 12 years, they became aware that she might not get the full SBP benefit, yet they had to keep paying premiums of $170 a month. The law requires that once you retire and are paying into an SBP benefit you must continue and can’t opt out unless you do so during a grace period early on. In effect, she had to continue to pay for a benefit she might not receive once her husband died.

Unintended consequences

The law is perplexing. SBP was created in 1972 with the intention of giving surviving spouses a portion of their service member’s retirement pay. The offset existed for all widows then, but the wording of the law was changed in 2003 to permit surviving spouses to remarry at or after age 57 and retain benefits with no offset or reduction of their SBP benefits. Because of that change, the law suddenly penalized those widows who never remarried or got remarried before the age of 57. Thus, an anomaly was created.

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In a 2009 court ruling related to the benefit offset, the court noted that the law’s wording was potentially unfair to one group and favorable to another. “Perhaps Congress intended to encourage marriage for older surviving spouses,” the court said. “Perhaps section 1131(e) simply represents a first step in an effort to eventually enact full repeal. After all, the service member paid for both benefits: SBP with premiums; DIC with his life.”

On Nov. 17, an amendment to eliminate the offset, sponsored by Senator Bill Nelson of Florida, was added to the National Defense Authorization Act, the bill that authorizes military expenditures.

“The ruling that led to two distinct classes of widows came from a federal court decision that said the military hadn’t followed a confusing section of federal law when it failed to award the full amount of both VA and Defense Department survivor benefits to spouses who remarried after age 57,” Nelson says.

“Unfortunately, Congress has never passed legislation that would fully repeal the offset for all widows,” he says. “My legislation would do just that.”

In support of Nelson’s amendment, the Gold Star Wives note that several other classes of survivors receive benefits without an offset, including children and parents. Full disclosure: My sister-in-law is a member of the Gold Star Wives. My brother’s 22-year military career ended in 1994, when he died in a service-related helicopter crash. His wife has chosen not to remarry.

A painful lesson

Smith received an A in her high-school government class, but she says it wasn’t until her husband started to lose his benefits that she really learned how the government works. And get involved she did. Smith already has worked with Congress to pass legislation helping disabled veterans; she says it’s important for each citizen to participate in our government.

“What’s the purpose of the military protecting and defending America’s democratic form of government if citizens don’t participate in it?” Smith says, adding that the Gold Star Wives urge people to contact their representative to support SB 260 which would eliminate the offset. For more information, go to the Gold Star Wives site at GoldStarWives.org.

The Congressional Budget Office pegged the cost of repealing the offset at $536 million per year, owed to 54,779 widows. That’s less than 1% of the $55 billion that will be paid out in fiscal year 2011 for military retirement and survivor payments.

These widows are fighting to keep their homes and to keep food on the table, plus raise their children. But the toughest part, they say, is that they are alone in their battle, without their husbands.

“I miss it all,” Smith says. “We were together for 35 years, and you just miss his companionship. He was my best friend.”

Jeanette Pavini is a regular contributor to various publications and Better.TV. She also hosts the weekly TV series, “The Real Deal” on NBC Bay Area and is the national spokeswoman for Coupons.com. Write to her at BuyerBewareMKTW@gmail.com.

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Jeanette
Pavini

Emmy Award-winning broadcast journalist, documentarian and author Jeanette Pavini covers consumer and investigative news for numerous publications, radio and television. Jeanette is based in the San Francisco Bay Area. Follow her on Twitter @jeanettepavini.

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Jeanette
Pavini

Emmy Award-winning broadcast journalist, documentarian and author Jeanette Pavini covers consumer and investigative news for numerous publications, radio and television. Jeanette is based in the San Francisco Bay Area. Follow her on Twitter @jeanettepavini.

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